What’s the Catch?

You’ve picked a trip, and now someone tells you to just get a credit card, usually like it’s the easiest thing in the world. Your gut says there has to be a catch.

You’re right, there is one. The catch isn’t the points. It’s what happens if earning them changes how you spend or leaves you paying interest.

Once you know that, you can decide whether a card makes sense for you.

Banks don’t hand out points to be nice.

Every time you pay with a credit card, the store pays a processing fee, and part of that goes to the bank that issued your card.

Banks also earn money from annual fees and from people who carry a balance. Points are how a bank gets you to reach for its card instead of someone else’s, and they’re only a bonus if you’re not the one paying interest.

Many cards offer a welcome bonus, also called a sign up bonus. Spend a set amount on your new card within a set time after opening it, and if you meet the offer’s terms, you earn a large amount of points early on.

The spending requirement is where people can get into trouble, because buying extra just to hit the number can cost more than the bonus is worth.

Not every charge counts, either. Cash advances, balance transfers and fees, including the annual fee, do not go toward the spend requirement, and a refund lowers the total you have spent so far. Everyday spending is what counts, and on many cards a purchase by someone you add to the account counts too.

Watch the clock, too. The spending window usually starts the day your account opens, not the day the card arrives in the mail, so you have a little less time than it sounds.

The deadline itself is firm. Miss it and the bonus is gone, so save the offer you applied for, a screenshot works, since the terms can differ from one application page to the next.

Eligibility can trip you up too. Some banks look at how many new cards you’ve opened recently, and some bonuses are one per customer or make you wait before you can earn one again. Eligibility rules are set by each bank and differ from offer to offer.

Annual fee timing varies by card. Some charge it right at account opening, others on your first statement.

That offer can change, and every so often a bank raises it above its normal level for a limited time. We track the usual welcome bonus for the cards we cover and note it on each card’s page when a better one comes along. We flag notable increases, and you can follow them in our alerts or learn the signs in How to Spot an Elevated Welcome Offer.

If you pay your full statement balance by the due date, you generally won’t be charged interest on your purchases. If you carry a balance from one month to the next, you’re usually charged interest on that balance, and you can lose the interest free window on new purchases too, so they can start collecting interest right away. At typical card interest rates, that can quickly outweigh what your points are worth.

Quick clarification: paying in full generally means paying the balance on your statement by its due date. Newer purchases may still show in your current balance, because they belong to the next statement.

Watch out

Interest can cost more than your points are worth.

Interest can erase the value of the points you earn.

When you apply for a card, the bank checks your credit, and that usually counts as a hard inquiry. It can lower your score a little for a while.

Checking your own score or report doesn’t lower it. Many credit card companies show your score for free on your statement or in your online account. You can also get your credit reports at no cost from the three credit bureaus through AnnualCreditReport.com.

For commonly used scoring models, paying on time and keeping your balances low compared with your credit limits matter a lot. Applying for several cards close together adds up, because each application usually brings its own hard inquiry and lenders can see a burst of new credit as a risk.

Good to know: a hard inquiry can stay on your credit report for up to two years, but its effect on your score usually fades well before that.

Good to know: the Consumer Financial Protection Bureau says an application for a credit card or other loan adds an inquiry that can lower your score, and suggests avoiding new credit applications right before a mortgage or during the mortgage process.

You don’t need excellent credit for every card. Many rewards cards ask for good to excellent credit, and some cards, like secured cards that start with a cash deposit, are designed for people who are new to credit or still building it.

Some cards charge a yearly fee, usually the ones with richer rewards and extra perks. Many other cards, including many starter cards, skip it entirely.

One way to look at an annual fee is to compare the value you would actually use in a year with the fee. I pay annual fees on several cards, but only when I’m getting more value than I’m paying. At the end of every year, I look at each card to see which ones aren’t keeping up.

The hard part is remembering what every card gives you. Our Card Companion guides help with that. The first one is on our credit card finder page, and more are on the way.

Yes. A credit card isn’t the only way to earn points:

• Shopping portals

  Many airline loyalty programs run free online shopping portals. You sign in with your member number and click through to the store before you buy, and you can earn miles without having that airline’s credit card.

• Flying and staying as a member

  A hotel or airline loyalty account can earn points on eligible stays and flights you were already taking.

• Promotions

  Airlines and hotels often run limited time offers, like bonus points for stays or flights, and many only count if you register before you travel. You can follow them on our alerts page.

Every little bit helps, and over time those small amounts can add up to something you can use.

Browse cards by annual fee, welcome bonus or points earned.

The credit card finder lets you sort them that way.

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Next up in this series, Start With the Trip takes the trip you picked and shows where points can help the most.